WHAT DRIVES URBAN CONSUMPTION IN MAINLAND CHINA? THE ROLE OF PROPERTY PRICE DYNAMICS

Yu-Fu Chen, Michael Funke and Aaron Mehrotra

No 255, Dundee Discussion Papers in Economics from Economic Studies, University of Dundee

Abstract: This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the consumption/housing ratio. We exploit the geographical variation in property prices by using a quarterly city-level panel dataset for the period 1998Q1 – 2009Q4 and rely on a panel error correction model. Overall, the results suggest a significant long run impact of property prices on consumption. They also broadly confirm the predictions from the theoretical model.

Keywords: Consumption; house prices; China; panel data (search for similar items in EconPapers)
JEL-codes: C23 E21 O53 R31 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics (2017)
Working Paper: What drives urban consumption in mainland china? The role of property price dynamics (2011)
Working Paper: What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics (2011)
Working Paper: What drives urban consumption in mainland China? The role of property price dynamics (2011)
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